Japan looks at nationalising nuclear plant at centre of crisis

TEPCO, the Japanese power company at the centre of the country’s worst ever nuclear emergency, could be subject of a government takeover. Elsewhere, the embattled firm’s president was hospitalised Wednesday due to high blood pressure.

The question of a full or partial government takeover of Tokyo Electric Power Co. (TEPCO) has become more pressing in recent days as the company continues to struggle to bring its nuclear reactors at the Fukushima site under control.

As the pressure mounts on the tarnished company, it was reported Wednesday that the utility company’s president Masataka Shimizu has been hospitalised due to high blood pressure and dizziness.

A Japanese government minister reported on Tuesday that the government could impose state ownership on Asia's largest utility. Speaking to a press conference, National Strategy Minister Koichiro Gemba, said that it was “possible to hold various discussions on how TEPCO should function,” and added that the government could step in to pay the hefty compensation bills the company couldn’t cover.

However, confusingly, Chief Cabinet Secretary Yukio Edano told a separate press conference that the government was “not at the moment considering nationalisation,” and TEPCO spokesman Hajime Motojuku told Reuters he was unaware of any nationalisation plans.

TEPCO has lost about $30 billion in market value since the devastating earthquake and tsunami on March 11, which knocked out electricity at its Fukushima nuclear plant site and precipitated the country’s worst nuclear crisis in history.

Compounding costs

The rumours of nationalisation spurred a frantic selloff of TEPCO’s shares on Tuesday and Wednesday. The utility fell 100 yen on the Nikkei Wednesday, the maximum daily limit. The 18 percent drop came after a 19 percent slump a day earlier. Analysts believe that nationalisation could hurt the embattled company’s shareholders, but be good news for its bondholders.

As if the TEPCO's precarious financial position and its workers’ heroic efforts to avert an even uglier nuclear disaster were not enough, the firm is now also struggling with a spiraling PR disaster. The firm was already tarnished by the 2002 scandal involving the fabrication of data during safety inspections of the Fukushima nuclear plant.

“Japanese people don’t expect [TEPCO] to tell the truth,” Philip White, who works for the Tokyo-based anti-nuclear group CNIC, told FRANCE 24. “People are skeptical of what they are hearing from TEPCO and the government, but they do not have other sources of information.”

Radiation worries have been compounded by the rolling blackouts the company has had to enforce in the service area it covers. Nomura Holdings analyst Shigeki Matsumoto said this month that TEPCO will have to pay more than $1 billion every month on alternative fuels to make up for lost power capacity.

TEPCO also operates seven nuclear reactors at the Kashiwazaki Kariwa site on Japan’s western coast, but only four of them were running before the March 11 earthquake. With the Fukushima plant still seeping radiation, analysts say the eventual bill could easily outstrip the company’s financial resources.

In addition, the compensation of businesses and households affected by the leaking radiation – in line with a law on payouts over nuclear power plant accidents - is expected to soar.

While it is still unclear if the company can handle the financial cost of the crisis, activists like White would welcome the government’s intervention in TEPCO’s operations. “TEPCO has demonstrated that it is incapable of fixing itself,” White argued. “TEPCO in its current form is not an option.”